For instance look at the Ultimate Oscillator indicator. I made some comparisons with some previous periods on the timeline to see what is possible or probable. What we found is that P2 did indeed produce a miraculous rally.
The first instance is the Ultimate Oscillator above the 53 line for an extended period of time. P2 set the record. It appears to be finally breaking beneath.
The second instance is the period of time until Ultimate Oscillator hits the 30 line. P2 also produced an amazingly long elevated time. Even in the previous two times, the Oscillator dipped beneath the 50 line twice each. P2? Not once!
What can we gleam just from this simple look at things? That the market is due for more selling. It is due to work its way down to the 30 line on the UO. So we have the odds stacked in our favor and history stacked in our favor. And we have a 5 wave pattern to boot.
So how can anyone call for a "new bull market" just looking at this chart alone? It seems to me a historic correction is rather due first.
Now granted, I only looked at the last 19 years or so, but hey, thats the time that matters.
[Update 7PM: In keeping within the spirit of the previous 5:50 update in proposing that Intermediate (1) of  advance the price low under 666, or at the least take back the majority of P1, we must have some map plan to achieve such price action in reasonable amount of time for an Intermediate-sized wave. Now in P1, Intermediate (1) took around 5 months to complete. Prechter thinks P3 should last longer than P1 so we can assume that (1) of P may last a bit longer than (1) of P.
Hence, I made a time and price target box for Intermediate (1). It is a wide-ranging box for now and I doubt the market will achieve the perfect waveform but you get the idea of what I am trying to roughly project. There really is not much time for pause in the rate of decline.
And hey, we don't have enough evidence of anything just yet to make these kinds of predictions but I'm bored.
[Update Sat 5:50PM: In Bob Prechter's most excellent (free) Elliott Wave Theorist April newsletter, he stood by his forecast that the ultimate bear market low would be under 1000 Dow and likely under 400. This is not some wild guess.
<------Sign up for FREE "Club EWI" and get a lot of wave stuff and analysis for free if you haven't already done so. Do it via my link and I get $3 and a small commission on any future EWI product you may choose to buy (there are no obligations or gimmicks in signing up). His April newsletter is still offered for free.]
It is using the guideline of wave theory in which prices of a wave four, in this case Grand Supercycle wave [IV], will at one point travel within the price range of the previous subwave four's territory. The previous subwave four happens to be the Supercycle wave (III) peak of the 1929 stock market at Dow 400. Hence, if this is correct, then that low price should be achieved in its supercycle wave (a).
Who can doubt that the world is on the brink of a financial deflationary collapse of epic proportions? We have basically a system in which the world borrowed its next 100 years of output for the sake of the current couple of decades in promising a superior standard of living for civilized society. Can this be sustained? Of course not.
What will be the result of a multi-trillion dollar bubble popping? We'll find out. So Prechter's theory of DOW sub 1000 is not insane. What is insane is that we find ourselves in such a pickle to begin with.
And if we make it to DOW 1000, why would 400 be out of the question?
Regardless, I too am proposing something based solidly on wave theory that ties into a deep price drop (which I largely concur with). What I am proposing is the fact that Intermediate wave (1) of Primary  should advance prices lower than Primary wave  price low. Simply put, the end of 5 Minor-sized waves should, in theory, take the market below 666 SPX.
What does this mean? This means that my original mappings http://1.bp.blogspot.com/_TwUS3GyHKsQ/S-HvX1gCRbI/AAAAAAAAFG8/_RfYAD7mvE0/s1600/spx.png from peak show a Minute wave occurring could be correct. The "flash crash" made me bump it up to Minor wave sized because...well...just because it seemed the right thing to do because the large price move seemed to warrant it. (At the same time, EWI had bumped it all the way to Intermediate sized and since bumped it back to Minor sized as I have)
However, if the DOW is going to get very low on the charts to ultimate DOW 1000 or 400, then it doesn't seem so strange afterall. Remember, we must use log scale because we'll be ranging very far up and down the scale!
Below is a basic EW pattern and you can see that on a wave three, the first subwave advances prices higher than the peak of the first wave degree higher. This is not always the case on a day to day pattern, but on a very large scale, its more probable.
We can actually since this phenomena within Primary wave . Notice that Minor blue 1 of Intermediate (3) advanced prices lower than the previous wave (1) of next higher degree. Hence Intermediate (1)'s price low of 1256 was bested by Minor 1 of (3)'s price low of 1200.]
Henceforth I am again going to change my wave degree labels back down a notch to Minuete level. Which means the market is working on Minor wave 1 low, not Intermediate!
Here is what that looks like. Also note that we see again how the first subwave of the next wave advances prices lower than the previous higher degree low. So wave (i) of [iii] should be lower than wave [i], which if I am correct, is a true statement. You can also see how red  is lower than black i.
So again, if we are to follow wave theory to its absolute limit as Prechter does, than we must accept the fact that Intermediate (1) of Primary wave  will likely result in a price lower than 666 SPX. At the very least, Intermediate wave (1) should take a majority of P2's rally away. So in that respect, Minute level looks correct.
[Update Sat 12:55: Ponzi (and funny video!) awareness exhibited by the mainstream media http://www.abc.net.au/news/video/2010/05/20/2905304.htm
Soon, they will do this kind of "skit" with the United States. Imagine something like this: "hey California needs to borrow $20B from the rest of the country". Except the punchline is every other state is broke too, and the Fed, and the US Treasury.
For now, we can still get away with "We'll borrow it from China and Japan". Yet no one has made the connection that China is now in a bear market and bubble(s) likely popping (and the fact they are communist duh!) and Japan is deep in debt itself. We really cannot say we're getting it from Europe anymore can we? Nor can we say we are getting it from the "oil rich countries" (Dubai)
There is no upside surprise in a Ponzi. Time is ticking....
(found this via Karl's most excellent The Market Ticker http://market-ticker.denninger.net/archives/2339-I-Think-Its-Called-Laughing-As-You-Sink.html )
[Update Sat 12:30PM: Ok as if I haven't scrambled your brains enough this morning, here is a chart that some have said could be possible current count and that the 1055 is a Minute wave [i] low. That would mean we are now in wave [ii].
This count doesn't have the "right look" and mangles some EW guidelines but its a possible count and in the end, if we need it to be we can certainly make it so. But at this moment, its not the top wave count. We would have to see a lot of waves over the coming week(s) to say this is what is going on. But for now, it just doesn't have the right look.
Again, arguably it counts better as 7 waves down (which is considered a corrective pattern) than a 5 or 9 wave structure (which is considered impulsive).
[Update Sat 12:07PM: Here is a chart for the super-bullish amongst us. It would be the Minor wave two 3-3-5 flat or expanded flat. Is it probable? Heck No! Why? because the technical damage incurred is very great (much greater than any other correction in P2).
But suppose the gummint bans shorting and there is a squeeze and one last euphoric blow off? I dunno why I even ponder these things.
But you can see why us wavers get obsessed sometimes with that "one more low required".
Incidentally I show the primary count pathing. Again, as I stated this morning, a new low under 1055 is required prior to any price move into or above 1114 SPX (or more likely lower than that). The next hit on the blue down trendline would be in my estimation Minute [ii] of Minor 3 of Intermediate (1) of Primary .
(Update note: Ironically, for those who favor outright new market highs above SPX 1220, they should actually wish for one more new low under 1055 so that a proper 5-3-5 zigzag from 1220 peak would form!)
And after Minute [ii]., we truly head into the abyss. Gear up, it should be a wild summer.
As much as an immediate drop come Monday heading to a new low would be a prefect fit for the bearish impulse pattern off the 1173 high, the impact of futures trading on the cash index rarely allows for the "perfect" wave form over a short time span. We have gaps up and down which distort (or sometimes hide) the subwaves and the channeling.
Regardless, the waves still must follow only 3 simple rules. And one of those rules is that wave four must never enter the price of wave one. (and yes we allow exceptions for this rule on leading and ending diagonals but this is not one of those cases).
So the bottom line is that a wave (iv) cannot retrace into 1114 SPX, or the bottom of wave (i) territory or else it cannot be treated as a wave (iv).
A strong "guideline" to wave theory is that it has to have the "right look". Yes that is subjective and that makes this more an artform than science but it is also the fun part about wave charts.
Another key part of wave chart is that one must use a logical approach to its construction. You look for relationships between waves and particularly on an impulse the expansion ratio of wave (iii) to wave (i). A "perfect' ratio is often that wave three in a structure expands 1.618 longer than the price length of wave one.
As per yesterday's update http://4.bp.blogspot.com/_TwUS3GyHKsQ/S_b5xcsC5fI/AAAAAAAAFYk/XToYYC7lSNY/s1600/wlsh5.png using the Wilshire5000, wave (iii) expanded an almost perfect 1.6078, just .01 from being a perfect expansion. That is powerful evidence one cannot ignore.
Also using logic, the hard rebound signals that this wave (iii) is likely over. We had the worst down ratio volume on the middle third of the wave and that also fits. We also had a clear zigzag trace from the 1055 low to a bounce of 1090
Ok back to my main point: We are still looking for a wave (iv) high if it has yet to find its peak. Yes, 1090 would be "perfect" but if the market has other short-term pathing plans then we cannot argue with it. We can however anticipate some possible variations on how the market can still achieve a wave (iv) and break no rules, nor butcher any strong guidelines to pieces.
So here is one such variation that would allow a bullish Monday bounce to the 200DMA at 1102.89, yet still fit the wave pattern of a wave (iv). The subsequent wave (v) would end beneath wave (iii) low and would be less powerful in selling pressure as was the "third of the third". There also would likely be divergence on the NYMO that yet another bounce is coming.
This would fit into one other final pattern of having the market maintain a trading range for a while within the May 6th "panic day" that some have pointed out. There has so far been one close above the trading range candle of May 6th. There has yet to be one close beneath the trading range candle. After that one close the market would perhaps bounce again to work off more oversold condtions and sentiment in a Minute [ii] that likely closes or challenges the big gap down on the chart and thus maintaining the trading range within the May 6th candle for a while.
So this is the backup scenario for the moment depending on what Monday does.
Finally wave form is paramount. We have a zigzag off the 1055 low so far and another move higher would likely be another zigzag to form a possible rising wedge.
And why would the market behave like this? Well we have had the first solid close under the 200DMA in a long time and now the weekend has come and there is time to ponder things. There are a lot of money managers that will "de-risk" (new buzzword) and why would they wait? A trip back up to the 200DMA would be an advantageous spot to sell at. So redemptions on a thoroughly damaged market http://4.bp.blogspot.com/_TwUS3GyHKsQ/S_cmuj987TI/AAAAAAAAFZo/01wCpxPFNVc/s1600/wlshweekly.png allow a wave (v) to occur.
The futures would support a move higher yet still maintain good form and channeling